And Zynga is opening up its huge base of players, to which it successfully cross-promotes in-house titles like Draw Something and Words With Friends, to other game developers.

All of those moves are based on the same basic insight about mobile consumers: Someone who's installed one app is a really good target for installing another one.

That's an obvious idea, of course. Razorfish's Garrick Schmitt talked about appvertising in 2010 at the SXSW Interactive conference. But only now are app marketers starting to get the tools to buy really effective appvertising.

The early results are stunning. Twitter, for example, tripled engagement rates in a test run by the Washington Post's SocialCode unit that targeted tweets by mobile platform.

Zynga's platform moves are too early to measure, with only a handful of partners unveiled last month. But the social-game maker has shown itself to be an absolute master of cross-promotion. Instead of selling ads per se, Zynga is taking a cut of in-game revenues. But it amounts to the same thing: promoting apps to an audience with the intent of driving installations.

According to Flurry, a maker of analytics and promotional tools for mobile-app developers, user acquisition—a broad category which includes app installs—is already the single largest category in the mobile-advertising market.

That's a conservative figure, since it doesn't capture the kind of cross-promotion that, say, Zynga offers to partners. But however you count it, the market is set to explode.

"Mobile apps can absorb the entire U.S. display and search budget and still be hungry for more," he says. Flurry's data, which comes from a wide swath of the mobile-app universe, suggests that at $1 CPMs, based on the number of mobile sessions and ad units available, could take $40 billion in spending today: "There's more inventory than there are ad dollars available."

Of course, that means downward pressure on CPMs—unless advertising platforms are able to figure out ways to optimize campaigns to drive installs.

Savvy app makers will take advantage of cheap inventory to build up their user numbers.

The bad news: We'll probably see a lot of arbitrage plays and flash-in-the-pan growth stories until the market develops and stabilizes.

There are historical analogies. Khalaf cites the late '90s, when Web publishers were the biggest buyers of Web advertising. Or the early part of the last decade, when eBay discovered the power of Google search ads long before established brands and used them to turbocharge the growth of its marketplace.

"Sand Hill Road is 10 years ahead of Madison Avenue," says Khalaf. "Some of this is driven by venture capitalists paying each other. That song and dance will end in about 18 months."

Eventually, mainstream advertisers will figure out how to tap apps as promotional vehicles. Khalaf points to Disney as a brand that's way ahead of others, using video ads that demonstrate gameplay to drive downloads. But most advertisers aren't there yet.